Broad Channel, Queens – Assemblyman Phil Goldfeder (D – Far Rockaway), together with community leaders and local families impacted by Supestorm Sandy, today at a press conference announced plans to introduce new state legislation creating the New York Flood Insurance Association (NYFIA), a joint underwriting association designed to serve New York State homeowners in flood-prone communities. The new body will provide homeowners with an alternative to rising federally-backed flood insurance premiums by offering economical, fair and non-discriminatory policies; and protect families from the unfair flood damage claims practices experienced following Superstorm Sandy.
“Our families were victimized by Sandy and then again by the Insurance Companies and NFIP who were supposed to help. Insurers have fought Sandy claims and challenged homeowner’s needs, adding insult to injury for those who went through so much and who still struggle to recover,” said Assemblyman Phil Goldfeder. “The New York Flood Insurance Association will be a strong system with shared risk that will give families a new choice for flood coverage and help keep premiums affordable so that they can remain strong and secure in their own homes.”
Goldfeder’s plan is modeled on the New York Property Insurance Underwriters Association, which was created in 1968 to provide dwelling and commercial coverage for inner-city property owners unable to get covered for fire insurance in the face of frequent rioting and urban decay. More recently, other states have taken similar steps to protect families following hurricanes. In 1993, the Florida state legislature created the Florida Hurricane Catastrophe Fund to lower premiums by providing partial reimbursements to insurers for catastrophic hurricane losses after Hurricane Andrew. In 2002, Florida created the Citizens Property Insurance Corporation as a joint underwriting association to expand insurance policy options for homeowners finding it difficult to insure their properties.
The legislation proposed by Assemblyman Goldfeder amends New York State insurance law to create the New York Flood Insurance Association as a choice for consumers when flood insurance is unaffordable or difficult to obtain. Under the proposed law, the Association’s membership would be comprised of state-approved insurers and would be governed by the Superintendent of the State Department of Financial Services and a board of 13 directors. Association members would have to follow a plan of operation requiring them to provide “economical, fair and non-discriminatory” flood coverage to policyholders and follow “reasonable and objective” underwriting standards. Any homeowner or renter who has made a reasonable effort to find coverage on the private market could be eligible to apply to the Association for coverage of up to $1.5 million for property and contents.
The Association includes provisions to help keep costs low for both policyholders and insurers. Policy premiums would be capped at certain percentages of private market policy rates, based on the class of property. The Association would also have the power to distribute any premium gains and losses in excess of 1% evenly among members. This is in sharp contrast to the federal government’s National Flood Insurance Program, which after 1986 was stripped of its ability to save and re-invest premium revenues. This is designed to help protect policyholders from fluctuations in the insurance market.
Following Superstorm Sandy, many homeowners found their insurance claims contested by providers, with some even experiencing allegedly fraudulent practices on the part of insurance adjusters. At the same time, coastal communities nationwide are faced with the potential for large increases in their flood insurance as a result of the Biggert-Waters Act of 2012, which Congress voted to delay until 2017. This leaves many in the community unsure of how they will be able to afford their premiums in the coming years.
“The National Flood Insurance Program has become a nightmare for coastal homeowners across the nation. Outrageous premiums, denied coverage, an erroneous and faulty mapping process and, most recently highlighted in media stories, the situation of thousands of storm victims’ Engineer reports being altered in order to deny homeowners desperately-needed flood insurance payouts,” said Dan Mundy, Jr., President of the Broad Channel Civic Association. “The concept of a state flood insurance program is one that we wholeheartedly support. We commend Assemblyman Goldfeder for taking the lead on this critical issue that affects hundreds of thousands of New York residents. This concept has the potential to offer an alternative means to allow homeowners the ability to obtain flood insurance, which is essential to maintaining home and real estate values throughout the state.”
Assemblyman Goldfeder has long been an advocate for families struggling with complicated insurance policies and rising premiums. In 2013, Goldfeder helped pass a comprehensive Sandy insurance legislative package to reform the process of providing insurance coverage, strengthen homeowners’ rights and hold companies to a higher standard of accountability. Last month, Goldfeder was appointed to the influential Assembly Committee on Insurance. At the time, Goldfeder heralded the appointment as an opportunity to continue his fight to improve insurance options for families. In introducing this new legislation, Goldfeder pledged to use his new role on the Insurance Committee to help make the Association the new law of the land.
“Our families have been held hostage by the mismanaged National Flood Insurance Program and by unscrupulous insurance companies,” concluded Goldfeder. “This Association will ensure that rising flood insurance premiums do not price families out of the neighborhoods they know and love. I thank Department of Financial Services Superintendent Benjamin Lawsky for his tireless work to protect New York families and I look forward to working with him, my colleagues in the Assembly and on the Insurance Committee to finally give families the choice they deserve when it comes to buying protection from floods.”